Turkey: Branches And Liaison Offices

Last Updated: 13 September 2013
Article by Naciye Yilmaz

Developing commercial relations and the need for access to new markets drives commercial enterprises to establish branches or liaison offices in different places. This newsletter article will assess the differences in the legal principles and procedures that govern the establishment of branches and liaison offices.

Branches

Definition and Elements. There is no definition of branch under Turkish Commercial Code No. 6102 ("TCC"). However, Article 9/2 of Law No. 5174 on the Union of Chambers and Commodity Exchanges of Turkey and Chambers and Commodity Exchanges ("Law No. 5174") stipulates that "although connected to the registered office [headquarters], workplaces which have a separate equity and accounting or workplaces for which accounts are kept in a registered office and have no separate equity but perform commercial activities" shall be considered as branches. Therefore, the essential elements of a branch are; (i) to be connected to the registered office, (ii) to be independent, (iii) to operate in a different place, (iv) to have separate accounting.

Regarding branch operations, it is mentioned that the branch's operations should be identical or similar to the registered office's operations. Nevertheless, branches independently perform commercial operations1.

Consequences. The TCC regulates certain obligations for the branches of commercial enterprises. First, branches must be registered with the trade registry as per Art. 40/3 TCC and to the chamber pursuant to Law No. 5174. Therefore, branches of commercial enterprises having their registered offices in Turkey shall be registered to the trade registries of the place where they are situated. Paragraph 4 of the same article sets forth that branches of foreign-based commercial enterprises "shall be registered similarly to domestic commercial enterprises, but provisions pertaining to the trade name of their country of origin are reserved". For such branches, a commercial representative should be appointed with full authorization. Moreover, as per Article 9 of Law No. 5174, branches shall also be registered in chambers of the places where they are situated.

Second, pursuant to the Article 48 TCC, "all branches should use the trade name of the registered office by mentioning the qualification of being a branch". Branches of foreign-based commercial enterprises should "mention the locations of the registered office and the branch and the qualification of being a branch in their trade name".

In addition, since the branch is property of the commercial enterprise, pursuant to Art. 202 of the Turkish Code of Obligations ("CO") and Art. 11 TCC, in the event of the transfer of a commercial enterprise, the branch shall also be subject to the transfer unless otherwise stipulated in the transfer agreement.

It should be also mentioned that it is possible to file a lawsuit in the place where the branch is situated against the registered office pursuant to the Art. 14/1 of Civil Procedure Law No. 6100. However, this possibility of filing such a lawsuit is limited by the operations of the branch.

Opening a Branch. Commercial enterprises wiling to open a branch in Istanbul should file an application with the trade registry with necessary documentation and deposit a fee for this purpose. The related documentation is different for domestic and foreign-based commercial enterprises. However, there is no differentiation for the required documentation related to the type of the commercial enterprise (limited liability, joint stock companies etc.)2.

Liaison Offices

Definition and Elements. Pursuant to the Article 6 of the Application Regulation of the Foreign Direct Investment Law ("Application Regulation"), the Ministry of Economy is competent to provide authorization to commercial enterprises established under foreign laws that want to open a liaison office, under the condition that such liaison offices do not perform commercial operations. The Ministry of Economy is also authorized to extend this authorization. Article 8 of the Application Regulation stipulates fields of activity for liaison offices. Therefore, liaison offices may be defined as representation offices which are attached to the foreign-based commercial enterprise and which can provide services such as representation, hosting, securing Turkish suppliers as well as quality control and audit of these suppliers, communication and transfer of information, planning and researching without conducting commercial activities.

Thus, foreign-based commercial enterprises may open branches or liaison offices. It should be emphasized that liaison offices must not conduct commercial activities. Therefore, the expenses of a liaison office shall be entirely covered by the foreign-based commercial enterprise.

Opening a Liaison Office. Commercial enterprises that wish to open a liaison office in Turkey should apply to the Ministry of Economy with the necessary documentation. Pursuant to Article 8 of the Application Regulation,the Ministry of Economy shall provide authorization for 3 years at maximum. Therefore, it is necessary to apply to the General Directorate of Incentive Implementation and Foreign Investment before the expiration of the authorization in order to secure an extension.

Article 7 of the Application Regulation lists the required documentation for opening a liaison office. These documents are as follows:

  • Application form;
  • Declaration comprising the scope of activity of the liaison office and a declaration with a commitment stating that the liaison office shall not perform any commercial activity, and a document indicating the signature authorization for the person signing the document on behalf of the foreign-based commercial enterprise;
  • Certificate of activity which is duly authenticated with an Apostille;
  • Activity report or balance sheet and income statement of the foreign-based commercial enterprise;
  • Authorization certificate to be provided to the person/persons authorized to conduct the activities of the liaison office; and
  • Power of attorney in the event the establishment procedures shall be handled by a person other than authorized person/persons.

Conclusion

Foreign-based commercial enterprises have several possibilities for conducting business in Turkey. Two of these possibilities are opening a branch or a liaison office as detailed above. However, while evaluating these possibilities, determination of the scope of the company's activity is important since the liaison offices must not perform commercial activities, but rather aims to represent the commercial enterprise within the market and to provide it information related to the market. Subsequent to the determination of the scope of activity, application and authorization procedures shall be followed before the relevant authorities.

Footnotes

1. Poroy, Yasaman, Ticari İşletme Hukuku [Law of Commercial Enterprises], p. 49.

2. Within this framework, a detailed list with explanations (in Turkish) may be found on the Istanbul Chamber of Commerce's website for branches to be opened in Istanbul:http://www.ito.org.tr

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions